The President is living in the past. Sure, college was a great investment in the 1960s and ’70s. Today? Not so much.

At first blush, Obama’s claim seems plausible: According to the U.S. Census, in 2010, the average high school graduate earned about $39,000, compared to about $83,000 for the average college graduate. At that rate, if he works from age 18 to 65, the high school grad will earn about $1.84 million over 47 years, while the college grad (from age 22 to 65) earns about $3.58 million – $1.74 million more than the high school grad, with four years less work.

But there’s a cost: According to the Department of Education, in 2009-10 the average cost of a college education was about $21,000 per year, double what it was in 1984. If tuition continues to rise at this rate, a four-year college education in 2012-16 will average about $100,000.

Is a return of $1.74 million over 47 years really the best $100,000 investment we can make? That depends upon the opportunity cost. What if an 18-year-old could choose to invest $100,000 either in a college education, or in the stock market until he reaches age 65?

During what Obama regards as America’s Golden Age — the Great Society era (1965-81) – the stock market would have been a poor bet. During that “malaise,” the Dow Jones Industrial Average declined at an annualized rate of 0.53 percent (See table). At that rate compounded annually, $100,000 invested in stocks would be whittled down to zero in just 23 years.

However, during the “long boom” of the past 30 years (1982-2012) since the first budget of Ronald Reagan – reviled though he is in Obama’s White House — the Dow has grown at an annualized rate of 9.59 percent. At that rate compounded annually for 47 years, $100,000 invested in the market would yield about $7.66 million – more than four times as much as a college education.

In today’s economy, the opportunity cost of investing $100,000 in college rather than stocks is $5.9 million. With 20 million college students, that works out to a social cost of $118 trillion over 47 years, or about $2.5 trillion per year – more than all federal revenues this year. Federal loan guarantees divert funds from more productive uses, creating a deadweight loss, allowing colleges to gouge students (whose debt now averages $27,000) in order to subsidize professors, whose average salary now exceeds $100,000 per year.

Period

Annualized Growth Rates

From

To

DJIA

June 22, 1965

June 22, 1982

-0.53%

June 22, 1982

June 22, 2012

9.59%

It’s not that education was more valuable in the past, but that stocks performed worse: the worse the economy performs, the better college looks in comparison. This might go a long way toward explaining Professor Jay Green’s startling findings in 2008 (Some things never change). It might also explain much of the otherwise inexplicable desire for economic destruction found in academia.

Is the market a better bet than college? That depends: Which will the next 47 years emulate, the Reagan revolution or the Great Society?